Second quarter revenue of $134.0 million was up sequentially and year-over-year

(PRNewswire) — Intersil Corporation (NASDAQ:
ISIL), a leading provider of innovative power management and precision analog solutions, today announced financial results for the second quarter ended July 1, 2016. Second quarter revenue of $134.0 million was up 3.7% sequentially and 1.2% year-over-year.

Company Highlights

Both Consumer and Computing (C&C) and Industrial and Infrastructure (I&I) revenue were up year-over-year.

I&I demand improved broadly, resulting in 7.8% sequential growth.

Gross margin increased sequentially again to 59.4% on a GAAP basis and 59.6% on a non-GAAP basis.

Planned closure of a portion of the company's manufacturing operations resulted in restructuring charges of $13.5 million, lowering GAAP operating margin and reducing GAAP earnings per share to $0.01.

Non-GAAP operating margin and earnings per share increased on both a sequential and year-over-year basis and were 21.1% and $0.17 for the quarter.

Cash and cash equivalents increased again to $257 million at quarter-end.

Quarterly ResultsRevenue for the second quarter improved sequentially due to strength in the company's I&I products. Aerospace revenue achieved a recent record, while automotive revenue was near record levels in the quarter. Both I&I power and industrial analog were up again sequentially as a result of improving end market demand. Second quarter C&C revenue decreased 3.6% sequentially due to expected weakness in consumer demand, but was up 2% year-over-year.

"With year-over-year growth in both of our key businesses, we're encouraged with the progress in returning Intersil to a sustained growth path," said Necip Sayiner, president and CEO of Intersil. "An improving cost structure and strong gross margins are providing for good earnings leverage as we move closer to our long-term target operating model."

The breakdown by end market follows:

Q2 2016

Q1 2016

Q2 2015

End Market Revenue

$M

%

$M

%

$M

%

Industrial & Infrastructure

88.6

66%

82.2

64%

87.9

66%

Consumer & Computing

45.4

34%

47.1

36%

44.5

34%

Total Revenue

$134.0

$129.3

$132.4

Table 1. Intersil End Market Mix

Second quarter GAAP results include the impact of the plan to decommission the company's 200 millimeter line at its Florida fab. As a result, second quarter GAAP results include $10 million for impairment of fixed assets and $3.5 million in severance and other restructuring charges. Second quarter GAAP gross margin was up again to 59.4%, a 60 basis point sequential increase. Total second quarter GAAP operating expenses increased to $77.1 million and included R&D expense of $34.2 million, SG&A expense of $25.2 million and other charges. GAAP operating income declined sequentially and year-over-year to $2.5 million, or 2 percent of revenue. Q2 GAAP net income was $1.4 million, resulting in earnings per share of $0.01.

The following non-GAAP results exclude restructuring and related costs, amortization of purchased intangibles, equity-based compensation expense, provision for the TAOS litigation, acquisition-related charges, gain on recovery of auction rate securities, as well as the related tax effects.

On a non-GAAP basis, the company reported strong results with gross margin improving again sequentially to 59.6% due to favorable product mix. Non-GAAP operating expenses for the second quarter were $51.6 million . Non-GAAP R&D expense was $30.4 million and non-GAAP SG&A expense was $21.2 million . Q2 non-GAAP operating income increased both sequentially and year-over-year to $28.3 million . Non-GAAP operating margin was 21.1%, an improvement of 110 basis points sequentially and 80 basis points year-over-year. Non-GAAP net income increased to $23.6 million in Q2, resulting in a sequential increase in non-GAAP earnings per share of 13% to $0.17 .